TRANSPO LAW JANUARY 12, 2018

Sulpicio Lines, Inc. vs. Curso (Recovery of Damages for Death of Passengers)- Jotham
American Airlines vs. CA (Jurisdiction of Local Courts under Warsaw Convention)- Miguel
Phil. Charter Insurance vs. Neptune Orient Lines (Contract of Carriage of Cargo, Applicable Law, Where Destination is Phils)- Jasz
Phil Airline Inc vs. CA (No Obligation to Accept Cargo)- Shaayne

BATCH 5

1. (JANICE)

UNSWORTH TRANSPORT INTERNATIONAL (PHILS.), INC., Petitioner,

vs.
COURT OF APPEALS and PIONEER INSURANCE AND SURETY CORPORATION, Respondents.
G.R. No. 166250 July 26, 2010

TOPIC: Nature and Function of Bill of Lading

Facts:
On August 31, 1992, the shipper Sylvex Purchasing Corporation delivered to UTI a shipment of 27 drums of various raw
materials for pharmaceutical manufacturing, consisting of: "1) 3 drums (of) extracts, flavoring liquid, flammable liquid x x x banana
flavoring; 2) 2 drums (of) flammable liquids x x x turpentine oil; 2 pallets. STC: 40 bags dried yeast; and 3) 20 drums (of) Vitabs:
Vitamin B Complex Extract." UTI issued Bill of Lading No. C320/C15991-2, covering the aforesaid shipment. The subject shipment
was insured with private respondent Pioneer Insurance and Surety Corporation in favor of Unilab against all risks in the amount
of P1,779,664.77 under and by virtue of Marine Risk Note Number MC RM UL 0627 92 and Open Cargo Policy No. HO-022-RIU.

On the same day that the bill of lading was issued, the shipment was loaded in a sealed 1x40 container van, with no.
APLU-982012, boarded on APL’s vessel M/V "Pres. Jackson," Voyage 42, and transshipped to APL’s M/V "Pres. Taft" for delivery to
petitioner in favor of the consignee United Laboratories, Inc. (Unilab).

On September 30, 1992, the shipment arrived at the port of Manila. On October 6, 1992, petitioner received the said
shipment in its warehouse after it stamped the Permit to Deliver Imported Goods procured by the Champs Customs Brokerage.
Three days thereafter, or on October 9, 1992, Oceanica Cargo Marine Surveyors Corporation (OCMSC) conducted a stripping
survey of the shipment located in petitioner’s warehouse.

Consequently, Unilab’s quality control representative rejected one paper bag containing dried yeast and one steel drum
containing Vitamin B Complex as unfit for the intended purpose. On November 7, 1992, Unilab filed a formal claim for the damage
against private respondent and UTI. On November 20, 1992, UTI denied liability on the basis of the gate pass issued by Jardine that
the goods were in complete and good condition; while private respondent paid the claimed amount on March 23, 1993. By virtue of
the Loss and Subrogation Receipt issued by Unilab in favor of private respondent, the latter filed a complaint for Damages against
APL, UTI and petitioner with the RTC of Makati.

Issue: Whether or not petitioner is a common carrier.

Held:
Admittedly, petitioner is a freight forwarder. The term "freight forwarder" refers to a firm holding itself out
to the general public (other than as a pipeline, rail, motor, or water carrier) to provide transportation of property for
compensation and, in the ordinary course of its business, (1) to assemble and consolidate, or to provide for
assembling and consolidating, shipments, and to perform or provide for break-bulk and distribution operations of the
shipments; (2) to assume responsibility for the transportation of goods from the place of receipt to the place of
destination; and (3) to use for any part of the transportation a carrier subject to the federal law pertaining to common
carriers.

A freight forwarder’s liability is limited to damages arising from its own negligence, including negligence in
choosing the carrier; however, where the forwarder contracts to deliver goods to their destination instead of merely
arranging for their transportation, it becomes liable as a common carrier for loss or damage to goods. A freight
forwarder assumes the responsibility of a carrier, which actually executes the transport, even though the forwarder
does not carry the merchandise itself.

Undoubtedly, UTI is liable as a common carrier. Common carriers, as a general rule, are presumed to have
been at fault or negligent if the goods they transported deteriorated or got lost or destroyed. That is, unless they
prove that they exercised extraordinary diligence in transporting the goods. In order to avoid responsibility for any
loss or damage, therefore, they have the burden of proving that they observed such diligence. Mere proof of delivery
of the goods in good order to a common carrier and of their arrival in bad order at their destination constitutes a
prima facie case of fault or negligence against the carrier. If no adequate explanation is given as to how the
deterioration, loss, or destruction of the goods happened, the transporter shall be held responsible. ###

_________________________________________________________________________________________
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2. (RHOWEE)

LORENZO SHIPPING CORP., petitioner, vs. CHUBB and SONS, Inc., GEARBULK, Ltd. and PHILIPPINE TRANSMARINE
CARRIERS, INC., respondents
G.R. No. 147724. June 8, 2004
TOPIC: Nature and Functions of Bill of Lading
FACTS:
Mayer Steel Pipe Corporation loaded bundles of steel pipes on board the vessel M/V Lorcon IV, owned by petitioner Lorenzo
Shipping, for shipment to Davao City. Petitioner Lorenzo Shipping issued a clean bill of lading designated as Bill of Lading No. T-35
for the account of the consignee, Sumitomo Corporation of San Francisco, California, USA, which in turn, insured the goods with
respondent Chubb and Sons, Inc.
The M/V Lorcon IV arrived in Davao. Respondent Transmarine Carriers received the subject shipment and was subsequently
discharged evidenced by a delivery cargo receipt. It discovered seawater in the hatch of M/V Lorcon IV, and found the steel pipes
submerged in it. The consignee Sumitomo then hired the services of surveyors to inspect the shipment prior to and subsequent to
discharge. Survey Report showed that the subject shipment was no longer in good condition, as in fact, the pipes were found with
rust formation on top and/or at the sides. After the survey, respondent Gearbulk loaded the shipment on board its vessel M/V San
Mateo Victory, for carriage to the United States. It issued Bills of Lading. All bills of lading were marked “ALL UNITS HEAVILY
RUSTED.”
Due to its heavily rusted condition, the consignee Sumitomo rejected the damaged steel pipes and declared them unfit for the
purpose they were intended. It then filed a marine insurance claim with respondent Chubb and Sons, Inc. which the latter settled in
the amount of US$104,151.00.
Respondent Chubb and Sons, Inc. filed a complaint for collection of a sum of money against respondents Lorenzo Shipping.
ISSUE: Whether or not Lorenzo Shipping is negligent in carrying the subject cargo.

HELD: YES.
Lorenzo Shipping was negligent in its care and custody of the consignee’s goods.
The steel pipes, subject of this case, were in good condition when they were loaded at the port of origin (Manila) on board petitioner
Lorenzo Shipping’s M/V Lorcon IV en route to Davao City. Petitioner Lorenzo Shipping issued clean bills of lading covering the
subject shipment. A bill of lading, aside from being a contract and a receipt, is also a symbol of the goods covered by it. A bill of
lading which has no notation of any defect or damage in the goods is called a “clean bill of lading.” A clean bill of lading constitutes
prima facie evidence of the receipt by the carrier of the goods as therein described.
The case law teaches us that mere proof of delivery of goods in good order to a carrier and the subsequent arrival in damaged
condition at the place of destination raises a prima facie case against the carrier. In the case at bar, M/V Lorcon IV of petitioner
Lorenzo Shipping received the steel pipes in good order and condition, evidenced by the clean bills of lading it issued. When the
cargo was unloaded from petitioner Lorenzo Shipping’s vessel at the Sasa Wharf in Davao City, the steel pipes were rusted all over.
M/V San Mateo Victory of respondent Gearbulk, Ltd, which received the cargo, issued Bills of Lading Nos. DAV/OAK 1 to 7 and Nos.
DAV/SEA 1 to 6 covering the entire shipment, all of which were marked “ALL UNITS HEAVILY RUSTED.” R.J. Del Pan Surveyors
found that the cargo hold of the M/V Lorcon IV was flooded with seawater, and the tank top was rusty, thinning and perforated,
thereby exposing the cargo to sea water. There can be no other conclusion than that the cargo was damaged while on board the
vessel of petitioner Lorenzo Shipping, and that the damage was due to the latter’s negligence. In the case at bar, not only did the
legal presumption of negligence attach to petitioner Lorenzo Shipping upon the occurrence of damage to the cargo. More so, the
negligence of petitioner was sufficiently established. ###
______________________________________________________________________________________________

3. KITEL
MOF COMPANY, INC., Petitioner,
vs.
SHIN YANG BROKERAGE CORPORATION Respondent

G.R. No. 172822

TOPIC: Binding Effect of Provisions of Bill of Lading

FACTS:

Halla Trading, a company based in Korea, shipped to Manila second hand cars and other articles on board the vessel
Hanjin Busan. The bill of lading prepared by carrier Hanjin Shipping named the respondent Shin Yang Brokerage as
consignee and stated that the consignee/receiver of the goods would be the one to pay for the freight and other
charges.

When the shipment arrived in Manila, petitioner MOF Company, Hanjin’s exclusive general agent in the Philippines,
repeatedly demanded the payment from Shin Yang Borkerage. Shin Yang refused payment contending that it did not
cause the importation of the goods and it is only the Consolidator of the shipment, and that the bill of lading was
prepared without their consent and was not properly endorsed.

MOF filed a case for sum of money before MeTC Pasay City for the payment obligation of respondent. MOF argued
that Shin Yang, as the named consignee in the bill of lading, entered itself as a party in the contract and bound itself to
the “Freight Collect” arrangement. In their defense, Shin Yang denied any involvement and stated that it never
authorized Halla Trading to ship the articles or to have its name included in the Bill of lading.

MeTC ruled in favour of MOF. RTC affirmed the decision of MeTC which held that MOF and Shin Yang entered a
contract of affreightment which Black’s Law Dictionary defined as a contract with the ship owner to hire his ship or
part of it, for the carriage of goods and generally take the form either of a charter party or a bill of lading.

CA dismissed the complaint of MOF stating that MOF failed to substantiate its claim that Shin Yang gave its consent to
be a consignee of the goods and that it was Hanjin who prepared the bill of lading. Hanjin is the principal while the
respondent is its agent.

ISSUE:

WON Shin Yang, who was not an agent of the shipper and who did not make any demand for the fulfillment of the
stipulations of the bill of lading drawn in its favor is liable to pay the corresponding freight and handling charges.

HELD:

NO.

Once the bill of lading is received by the consignee who does not object to any terms or stipulations contained
therein, it constitutes as an acceptance of the contract and of all of its terms and conditions, of which the acceptor has
actual or constructive notice.
A consignee, although not a signatory to the contract of carriage between the shipper and the carrier, becomes a
party to the contract by reason of either:
a. the relationship of agency between the consignee and the shipper/ consignor;
b. the unequivocal acceptance of the bill of lading delivered to the consignee, with full knowledge of its
contents OR
c. availment of the stipulation pour autrui, i.e., when the consignee, a third person, demands before the carrier
the fulfillment of the stipulation made by the consignor/shipper in the consignee’s favor, specifically the
delivery of the goods/cargoes shipped

Common carriers are not obligated by law to carry and to deliver merchandise, and persons are not vested with the
right to prompt delivery, unless such common carriers previously assume the obligation. Said rights and obligations
are created by a specific contract entered into by the parties.

In the case at bar, Shin Yang consistently denied that it authorized Halla Trading to ship the goods in its behalf or that
it got hold of the bill of lading. Basic is the rule in evidence that the burden of proof lies upon him who asserts it, not
upon him who denies. MOF has the burden to controvert all these denials, it being insistent that Shin Yang asserted
itself as the consignee and the one that caused the shipment of the goods to the Philippines.

MOF failed to meet the required quantum of proof. Other than presenting the bill of lading, MOF has not adduced any
other credible evidence to strengthen its cause of action. It did not even present any witness in support of its
allegation that it was Shin Yang which furnished all the details indicated in the bill of lading and that Shin Yang
consented to shoulder the shipment costs. There is also nothing in the records which would indicate that Shin Yang
was an agent of Halla Trading Co. or that it exercised any act that would bind it as a named consignee.

_________________________________________________________________________________________
_____

4. (SAM)

Belgian Overseas Chartering vs. Phil. First Ins (Binding Effect of Provisions of Bill of Lading)

BELGIAN OVERSEAS CHARTERING, ET. AL. VS. PHILIPPINE FIRST INSURANCE CO. INC.

TOPIC: Bill of Lading – Binding Effects of Provisions of Bill of Lading

FACTS: CMC Trading A.G. shipped on board the M/V Anangel Sky at Hamburg, Germany 242 coils of various prime cold
rolled steel sheets for transportation to Manila consigned to the Philippine Steel Trading Corporation. On July 28,
1990, M/V Anangel arrived at the port of Manila and within the subsequent days, discharged the cargo. It was found
that four (4) coils were in bad order and declared it as total loss. Formal demand was made by the Philippine Steel
Trading Corporation against the herein petitioners but to no avail. Consequently, the herein respondent Philippine
First Insurance Co. Inc paid Philippine Steel Trading Corporation. Subsequently, respondent filed a complaint for
recovery of the amount paid by them, to the consignee as insured.

The RTC dismissed the complaint because the respondent had failed to prove its claims with quantum of proof
required by law. On appeal, the CA reversed the trial court’s ruling. The CA ruled that the petitioners were liable for
the loss or the damage of the goods shipped, because they had failed to overcome the presumption of negligence
imposed on common carriers. On this petition, the petitioners contend that they are exempted from liability because
they cited the notation in the Bill of Lading the following – “metal envelopes rust stained and slightly dented” as
evidence that the character of the goods or defect in the packing or the containers was the proximate cause of the
damage. The petitioners also contend that assuming they are liable, their liability should be limited to US$500 per
package s provided in the Bill of Lading and by Section 4(5) of COGSA.

ISSUE: Whether or not a notation in the bill of lading at the time of loading is sufficient to show pre-shipment damage
and to exempt from liability.

HELD: NO. From the evidence on record, it cannot be reasonably concluded that the damage of the four coils was due
to the condition noted on the Bill of Lading. The aforecited exception refers to cases when goods are lost or damaged
while in transit as a result of the natural decay of perishable goods or the fermentation or evaporation of substances
liable therefor, the necessary and natural wear of goods in transport, defects in packages in which they are shipped, or
the natural propensities of animals. None of these is present in the instant case.

The statement in the bill of lading that the shipment was in apparent good condition is sufficient to sustain a finding of
absence of defects in the merchandise, but such statement will create a prima facie presumption only as to the
external condition and not to that not open to inspection.

A bill of lading serves two functions. First, it is a receipt for the goods shipped. Second, it is a contract by which three
parties—namely, the shipper, the carrier, and the consignee—undertake specific responsibilities and assume
stipulated obligations. In a nutshell, the acceptance of the bill of lading by the shipper and the consignee, with full
knowledge of its contents, gives rise to the presumption that it constituted a perfected and binding contract.
Further, a stipulation in the bill of lading limiting to a certain sum the common carrier’s liability for loss or destruction
of a cargo—unless the shipper or owner declares a greater value —is sanctioned by law. There are, however, two
conditions to be satisfied: (1) the contract is reasonable and just under the circumstances, and (2) it has been fairly
and freely agreed upon by the parties. The rationale for, this rule is to bind the shippers by their agreement to the
value (maximum valuation) of their goods.

In the case before us, there was no stipulation in the Bill of Lading limiting the carrier’s liability. Neither did the
shipper declare a higher valuation of the goods to be shipped. This fact notwithstanding, the insertion of the words
“L/C No. 90/02447 cannot be the basis for petitioners’ liability.

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_____

5. (NIKKI)

Magellan Manufacturing Corp vs. CA (Types of Bills of Lading)

MAGELLAN MANUFACTURING MARKETING CORPORATION," petitioner, vs. COURT OF APPEALS,

ORIENT OVERSEAS CONTAINER LINES and F.E. ZUELLIG, INC. respondents
G.R. No. 95529. August 22,1991

Topic: Types of Bills of Lading

FACTS
Magellan Manufacturers Marketing Corp. (MMMC) entered into a contract with Choju Co. of Yokohama,
Japan to export 136,000 anahaw fans for and in consideration of $23,220.00. As payment thereof, a letter of
credit was issued to plaintiff MMMC by the buyer. Through its president, James Cu, MMMC then contracted
F.E. Zuellig, a shipping agent, through its solicitor, one Mr. King, to ship the anahaw fans through the other
appellee, Orient Overseas Container Lines, Inc., specifying that he needed an on-board bill of lading and that
transhipment is not allowed under the letter of credit. On June 30, 1980, appellant MMMC paid F.E. Zuellig
the freight charges and secured a copy of the bill of lading which was presented to Allied Bank. The bank
then credited the amount of US$23,220.00 covered by the letter of credit to appellant’s account. However,
when appellant’s president James Cu, went back to the bank later, he was informed that the payment was
refused by the buyer allegedly because there was no on-board bill of lading, and there was a transhipment
of goods. As a result of the refusal of the buyer to accept, upon appellant’s request, the anahaw fans were
shipped back to Manila by appellees, for which the latter demanded from appellant payment of P246,043.43.
Appellant abandoned the whole cargo and asked appellees for damages.

ISSUE
1. WON there was transhipment? YES.
2. WON the bill of lading which reflected the transhipment against the letter of credit is consented by
MMMC? YES.

RULING
1. Yes. Transhipment, in maritime law, is defined as “the act of taking cargo out of one ship and loading it
in another," or “the transfer of goods from the vessel stipulated in the contract of affreightment to
another vessel before the place of destination named in the contract has been reached," or “the transfer
for further transportation from one ship or conveyance to another." Clearly, either in its ordinary or its
strictly legal acceptation, there is transhipment whether or not the same person, firm or entity owns the
 vessels. In other words, the fact of transhipment is not dependent upon the ownership of the
transporting ships or conveyances or in the change of carriers, as the petitioner seems to suggest, but
rather on the fact of actual physical transfer of cargo from one vessel to another.

It appears on the face of the bill of lading the entry “Hong Kong” in the blank space labeled
“Transhipment,"' which can only mean that transhipment actually took place. This fact is further
bolstered by the certification issued by private respondent F.E. Zuellig, Inc. dated July 19. 1980,
although it carefully used the term ‘transfer” instead of transhipment. Nonetheless, no amount of
semantic juggling can mask the fact that transhipment in truth occurred in this case.

2. Yes. It is a long standing jurisprudential rule that a bill of lading operates both as a receipt and as a
contract. It is a receipt for the goods shipped and a contract to transport and deliver the same as
therein stipulated. As a contract, it names the parties, which includes the consignee, fixes the route,
destination, and freight rates or charges, and stipulates the rights and obligations assumed by the
parties. Being a contract, it is the law between the parties who are bound by its terms and conditions
provided that these are not contrary to law, morals, good customs, public order and public policy. A bill
of lading usually becomes effective upon its delivery to and acceptance by the shipper. It is presumed
that the stipulations of the bill were, in the absence of fraud, concealment or improper conduct, known
to the shipper, and he is generally bound by his acceptance whether he reads the bill or not.

In the light of the series of events that transpired in the case at bar, there can be no logical conclusion
other than that the petitioner had full knowledge of, and actually consented to, the terms and conditions
of the bill of lading thereby making the same conclusive as to it, and it cannot now be heard to deny
having assented thereto. As borne out by the records, James Cu himself, in his capacity as president of
MMMC, personally received and signed the bill of lading. On practical considerations, there is no better
way to signify consent than by voluntarily signing the document which embodies the agreement.

Moreover, based from the record that the appellant actually consented to the transhipment when it
received the bill of lading personally at F.E. Zuellig’s office. There clearly appears on the face of the bill
of lading under column “PORT OF TRANSHIPMENT" an entry “HONGKONG". Despite said entries he still
delivered his voucher and the corresponding check in payment of the freight, implying that he consented
to the transhipment. "

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_____

6. (JOTHAM)

Keng Hua Paper Products vs. CA (Parties Bound by Terms of Bill—-On Consignee)

Keng Hua Paper Products Co., Inc.

vs.
Court of Appeals, RTC of Manila, Br. 21, and Sea-Land Service, Inc.

G.R. No. 116863 February 12, 1998

Facts
Herein petitioner Keng Hua Paper (consignee) purchased a shipment (50 tons) of waste paper from Ho Kee Waste
Paper in Hong Kong (shipper). On June 29, 1982, herein private respondent (carrier) received at its Hong Kong
terminal a sealed container containing the aforementioned shipment bound for Manila. The carrier thereafter issued a
bill of lading for the same. On July 9, 1982, the shipment was discharged at the Manila International Container Port.
Notices of arrival were transmitted to the consignee but the latter failed to discharge the shipment from the container
during the "free time" period or grace period for delivery. The said shipment remained inside the carrier's container
from the moment the free time period expired on July 29, 1982 until 481 days hereafter. During the 481-day period,
demurrage charges accrued. Within the same period, letters demanding payment were sent by the carrier to the
consignee who, however, refused to settle its obligation which eventually amounted to P67,340.00. In its answer,
consignee alleged that the carrier has no cause of action against it, for the latter did not hire the former to carry the
merchandise. Furthermore, the consignee contended that the cause of action should be against the shipper which
contracted the carrier. When its cause failed in the trial court and the Court of Appeals, herein petitioner further
added that it should not be bound by the provisions of the bill of lading (on liability for demurrage charges), as it has
not given its consent thereto.

Issue(s)
Who is liable for the demurrage charges for the unpaid cargo?

Ruling
The petitioner is liable to pay the demurrage charges on the unclaimed cargo. A bill of lading serves two functions.
First, it is a receipt for the goods shipped. Second, it is a contract by which three parties, namely, the shipper, the
carrier, and the consignee undertake specific responsibilities and assume stipulated obligations. In the case at bar,
both lower courts held that the bill of lading was a valid and perfected contract between the shipper (Ho Kee), the
consignee (Petitioner Keng Hua), and the carrier (Private Respondent Sea-Land). Section 17 of the bill of lading
provided that the shipper and the consignee were liable for the payment of demurrage charges for the failure to
discharge the containerized shipment beyond the grace period allowed by tariff rules. Applying said stipulation, both
lower courts found petitioner liable. As to the contention that the consignee never consented to it, the Court noted
that petitioner admitted to having received the bill of lading immediately after the arrival of the shipment. Having
been afforded an opportunity to examine the said document, petitioner did not immediately object to or dissent from
any term or stipulation therein. It was only six months later, on January 24, 1983, that petitioner sent a letter to
private respondent saying that it could not accept the shipment. Petitioner's inaction for such a long period conveys
the clear inference that it accepted the terms and conditions of the bill of lading.

(The Supreme Court likewise rejected the same contention of non-consent, as it was an objection raised for the first
time on appeal.)

_________________________________________________________________________________________
_____

??????

MACAM VS. CA (When Does Contract of Carriage End)

Benito Macam
vs.
Court of Appeals, China Ocean Shipping Co., and Wallem Philippines Shipping, Inc.

G.R. No. 125524 August 25, 1999

Facts
On 4 April 1989 petitioner Benito Macam, doing business under the name and style Ben-Mac Enterprises, shipped on
board the vessel Nen Jiang, owned and operated by respondent China Ocean Shipping Co., through local agent
respondent Wallem Philippines Shipping, Inc. 3,500 boxes of watermelons valued at US$5,950.00 covered by a bill of
lading, and 1,611 boxes of fresh mangoes covered by a separate bill of lading. The Bills of Lading contained the
following pertinent provision: "One of the Bills of Lading must be surrendered duly endorsed in exchange for the
goods or delivery order. The shipment was bound for Hong Kong with PAKISTAN BANK as consignee and Great
Prospect Company of Kowloon, Hong Kong (hereinafter GPC) as notify party, as indicated in the bills of lading.
However, in the export invoices GPC was clearly named as buyer/importer. Upon arrival at Hong Kong however,
respondent Wallem delivered the shipment directly to GPC instead of PAKISTAN Bank. Subsequently, GPC failed to pay
PAKISTAN BANK such that the latter refused likewise to pay petitioner. Petitioner claims that such an act is a
misdelivery, but respondents countered, explaining that that it is a standard maritime practice, when immediate
delivery is of the essence (in this case, the goods were perishable), for the shipper to request or instruct the carrier to
deliver the goods to the buyer upon arrival at the port of destination without requiring presentation of the bill of
lading as that usually takes time.

Issue(s)
Was there misdelivery constituting breach of contract of carriage of goods?

Ruling
No. The submission of petitioner that "the fact that the shipment was not delivered to the consignee as stated in the
Bill of Lading or to a party designated or named by the consignee constitutes a misdelivery thereof" is unfounded.
Firstly, Article 1736 of the Civil Code provides: “The extraordinary responsibility of the common carriers lasts from the
time the goods are unconditionally placed in the possession of, and received by the carrier for transportation until the
same are delivered, actually or constructively, by the carrier to the consignee, or to the person who has a right to
receive them, without prejudice to the provisions of article 1738.” It bears emphasis that the extraordinary
responsibility of the common carriers lasts until actual or constructive delivery of the cargoes to the consignee or to
the person who has a right to receive them. PAKISTAN BANK was indicated in the bills of lading as consignee whereas
GPC was the notify party. However, in the export invoices GPC was clearly named as buyer/importer. Petitioner also
referred to GPC as such in his demand letter to respondent WALLEM and in his complaint before the trial court. This
premise draws the conclusion that the delivery of the cargoes to GPC as buyer/importer which, conformably with Art.
1736 had, other than the consignee, the right to receive them, was proper.

_________________________________________________________________________________________
_____

7. (MIGUEL)

Asian Terminals Inc vs. Philam Insurance (When Does Contract of Carriage End)

_________________________________________________________________________________________
_____

8. (JASMINE)

SAMAR MINING COMPANY, INC., plaintiff-appellee, vs. NORDEUTSCHER LLOYD and CF. SHARP & COMPANY, INC.,
defendants-appellants

No. L-28673. October 23, 1984

TOPIC: When does contract of Carriage End

Facts:

The case arose from an importation made by Samar Mining Company, Inc., (Consignee) of 1 crate Optima
welded wedge wire sieves through the M/S Schwabenstein, a vessel owned by Nordeutscher Lloyd (represented by
CF. Sharp & Co., Inc.). Upon arrival of the vessel at the port of Manila, the importation was unloaded and delivered in
good order and the condition to the bonded warehouse of AMCYL. The goods however were never delivered to, nor
received by, the consignee at the port of destination in Davao.

Letter of complaint were sent by the consignee to the defendants but the formed failed to elicit the desired
response. Hence, consignee filed a formal complaint.

Issue:

Whether or not the defendants are liable.

Held:
 No. Two undertakings appeared embodied and/or provided for in the Bill of Lading in question. The first is
FOR THE TRANSPORT OF GOODS from Bremen, Germany to Manila. The second, THE TRANSSHIPMENT OF THE SAME
GOODS from Manila to Davao, with appellant acting as agent of the consignee. At the hiatus between these two
undertakings of appellant which is the moment when the subject goods are discharged in Manila, its personality
changes from that of carrier to that of agent of the consignee. Thus, the character of appellant’s possession also
changes, from possession in its own name as carrier, into possession in the name of consignee as the latter’s agent.
Such being the case, there was, in effect, actual delivery of the goods from appellant as carrier to the same appellant
as agent of the consignee. Upon such delivery, the appellant, as erstwhile carrier, ceases to be responsible for any loss
or damage that may befall the goods from that point onwards. This is the full import of Article 1736, as applied to the
case before us.

“Article 1736. The extraordinary responsibility of the common carrier lasts from the time the goods are
unconditionally placed in the possession of, and received by the carrier for transportation until the same are
delivered, actually or constructively, by the carrier to the consignee, or to the person who has a right to receive
them, without prejudice to the provisions of article 1738.”

_________________________________________________________________________________________
_____

9. (SHAAYNE)

Unsworth Transport International vs. CA (Obligation of Carrier)

UNSWORTH TRANSPORT INTERNATIONAL (PHILS.), INC., Petitioner vs COURT OF APPEALS and PIONEER INSURANCE
AND SURETY CORPORATION, Respondents

G.R. No. 166250 July 26, 2010

FACTS:

Shipper Sylvex Purchasing Corporation delivered to Unsworth Trans Int’l (UTI) a shipment of 27 drums of various raw
materials for pharmaceuticalcmanufacturing. A bill of lading was issued. The shipment was loaded on American
President Lines (APL) for delivery. M/V Pres Jackson then transshipped(transferred) to M/V Pres Taft. Consignee is
Unilab. UTI received the shipment (upon arrival in the Port of Manila) and placed it in its warehouse. UTI stamped the
Permit to Deliver Imported Goods procured by Champs (customs broker).

Three days after, Oceanica Cargo Marine Surveyors Corp. (OCMSC) conducted a stripping survey of the shipment, the
results showed that 1 steel drum which contained Vitamin B Complex had a hole on the side with approx. spilling of
1%. Nonetheless, the arrastre Jardine Davies Transport Services (Jardine) issued Gate Pass which noted that the
shipment was complete and in good order. Upon arrival at Unilab’s warehouse, J.G. Bernas Adjusters and Surveyors
(J.G. Bernas) surveyed the shipment. The report stated that 1 bag had a tearon the side, the contents partly spilled, 1
drum was punctured and retaped on the bottom side whose content was lacking and that there were 5 drums lacking.
The final inspection yielded the same results.

Afterwhich, Unilab’s quality control representative rejected one paper bag containing dried yeast and one steeldrum
of Vit. B Complex for being unfit for the intended purpose. Unilab filed a formal claim for damages against Private
Respondent Pioneer Insurance and Surety Corp. (PISC) and UTI. UTI denied liability on the basis of the gate pass issued
by Jardine that the goods were in complete and in good condition. PISC paid the claimed amount by virtue of the Loss
and Subrogation Receipt, PISC filed against UTI a complaint for Damages.

RTC ruled in favor of PISC and against APL and CA affirmed the same.

ISSUE:

Whether or not petitioner is liable as a common carrier.

HELD:
YES

Petitioner is a freight forwarder. The term freight forwarder" refers to a firm holding itself out to the general public
(other than as a pipeline, rail, motor, or water carrier) to provide transportation of property for compensation and, in
the ordinary course of its business, (1) to assemble and consolidate, or to provide for assembling and consolidating,
shipments, and to perform or provide for break-bulk and distribution operations of the shipments; (2) to assume
responsibility for the transportation of goods from the place of receipt to the place of destination; and (3) to use for
any part of the transportation a carrier subject to the federal law pertaining to common carriers.

A freight forwarders liability is limited to damages arising from its own negligence, including negligence in choosing
the carrier; however, where the forwarder contracts to deliver goods to their destination instead of merely arranging
for their transportation, it becomes liable as a common carrier for loss or damage to goods. A freight forwarder
assumes the responsibility of a carrier, which actually executes the transport, even though the forwarder does not
carry the merchandise itself.

It is undisputed that UTI issued a bill of lading in favor of Unilab. Pursuant thereto, petitioner undertook to transport,
ship, and deliver the 27 drums of raw materials for pharmaceutical manufacturing to the consignee.

A bill of lading is a written acknowledgement of the receipt of goods and an agreement to transport and to deliver
them at a specified place to a person named or on his or her order.

It operates both as a receipt and as a contract. It is a receipt for the goods shipped and a contract to transport and
deliver the same as therein stipulated. As a receipt, it recites the date and place of shipment, describes the goods as
to quantity, weight, dimensions, identification marks, condition, quality, and value. As a contract, it names the
contracting parties, which include the consignee; fixes the route, destination, and freight rate or charges; and
stipulates the rights and obligations assumed by the parties.

Undoubtedly, UTI is liable as a common carrier. Common carriers, as a general rule, are presumed to have been at
fault or negligent if the goods they transported deteriorated or got lost or destroyed. That is, unless they prove that
they exercised extraordinary diligence in transporting the goods. In order to avoid responsibility for any loss or
damage, therefore, they have the burden of proving that they observed such diligence.

_________________________________________________________________________________________
_____

10. (JANICE)

Calvo vs UCPB General Insurance Co.

TOPIC: Obligation of Carrier

FACTS:
 Virgines Calvo, owner of Transorient Container Terminal Services Inc – a sole proprietorship customs broker
 Contract with San Miguel Corporation – transfer of 114 reels of semi-chemical fluting paper and 124 reels of Kraft liner
board from Manila Port Area to SMC’s warehouse in Tabacalera Compound, Romuladez St., Ermita, Manila
 Cargo insured with UCPB General Insurance Co.
 July 14, 1990 – shipment contained in 30 metal vans on board MV Hayakawa Maru arrived in Manila
 July 15 – unloaded to the custody of the arrastre operator – Manila Port Services Inc
 July 23 – July 25 – withdrew cargo and delivered according to the contract
 July 25 – cargo inspected by Marine Cargo Surveyors
o 15 reels of semi-chemical fluting paper wet/stained/torn
o 3 reels of kraft liner boars were torn
o Damage cost: Php 93,112
 SMC collected from UCPB
 December 20 - UCPB, as subvrogee of SMC, brought a suit against TCTSI in Makati RTC Brancg 148
  Makati RTC: it has been held that the mere proof of delivery of goods in good order to a carrier, and of their arrival at the
place of destination in bad order, makes out a prima facie case against the carrier, so that if no explanation is given as to
how the injury occurred, the carrier must be held responsible. It is incumbent upon the carrier to prove that the loss was
due to accident or some other circumstances inconsistent with its liability.
o Pay Php 93,112 + 25% as lawyer’s fee + cost of suit
 Calvo: Not a common carrier but a private carrier because, as a customs broker and warehouseman, she does not
indiscriminately hold her services out to the public but only offers the same to select parties with whom she may contract
in the conduct of her business.
 CA affirmed RTC decision.

ISSUE: WON she is a common carrier?

HELD: Yes
 The above article makes no distinction between one whose principal business activity is the carrying of persons or goods
or both, and one who does such carrying only as an ancillary
 There is greater reason for holding petitioner to be a common carrier because the transportation of goods is an integral
part of her business. To uphold petitioner’s contention would be to deprive those with whom she contracts the protection
which the law affords them notwithstanding the fact that the obligation to carry goods for her customers, as already noted,
is part and parcel of petitioner’s business.
 When Calvo's employees withdrew the cargo from the arrastre operator, they did so without exception or protest either with
regard to the condition of container vans or their contents
 Calvo must do more than merely show the possibility that some other party could be responsible for the damage. It must
prove that it used "all reasonable means to ascertain the nature and characteristic of goods tendered for transport and that
it exercised due care in the handling
For 1734(4) to apply, the rule is that if the improper packaging or, in this case, the defects in the container, is/are
known to the carrier or his employees or apparent upon ordinary obserobservation he nevertheless accepts the same
without protest or exception notwithstanding such condition, he is not relieved of liability for damage resulting
therefrom.

_________________________________________________________________________________________
_____

11. (RHOWEE)

ASIAN TERMINALS, INC., Petitioner,

vs.
SIMON ENTERPRISES, INC., Respondent.
G.R. No. 177116 February 27, 2013

TOPIC: OBLIGATION OF COMMON CARRIER

FACTS:

Contiquincybunge Export Company loaded 6,843.700 metric tons of U.S. Soybean Meal in Bulk on board the
vessel MN "Sea Dream" at the Port of Louisiana, U.S.A., for delivery to the Port of Manila to respondent Simon
Enterprises, Inc., as consignee. When the vessel arrived in Manila, the shipment was discharged to the receiving
barges of petitioner Asian Terminals, Inc. (ATI), the arrastre operator. Respondent later received the shipment but
claimed having received only 6,825.144 metric tons of U.S. Soybean Meal, or short by 18.556 metric tons.

Contiquincybunge Export Company made another shipment to respondent and allegedly loaded on board the vessel M/V
"Tern" at the Port of Darrow, Louisiana, U.S.A. 3,300.000 metric tons of U.S. Soybean Meal in Bulk for delivery to respondent at the
Port of Manila. The subject shipment was discharged to the receiving barges of petitioner ATI and received by respondent which,
however, reported receiving only 3,100.137 metric tons instead of the manifested 3,300.000 metric tons of shipment. Respondent
filed against petitioner ATI and the carrier a claim for the shortage.
Thus, , respondent filed with the Regional Trial Court of Manila an action for damages against the unknown owner of the
vessels M/V "Sea Dream" and M/V "Tern," its local agent Inter-Asia Marine Transport, Inc., and petitioner ATI alleging that it suffered
the losses through the fault or negligence of the said defendants.
ISSUE: Whether or not Asian Terminals Inc I is liable to pay for damages.
HELD: NO.
Though it is true that common carriers are presumed to have been at fault or to have acted negligently if the goods
transported by them are lost, destroyed, or deteriorated, and that the common carrier must prove that it exercised extraordinary
diligence in order to overcome the presumption, the plaintiff must still, before the burden is shifted to the defendant, prove that the
subject shipment suffered actual shortage. This can only be done if the weight of the shipment at the port of origin and its
subsequent weight at the port of arrival have been proven by a preponderance of evidence, and it can be seen that the former
weight is considerably greater than the latter weight, taking into consideration the exceptions provided in Article 1734 of the Civil
Code.
In this case, respondent failed to prove that the subject shipment suffered shortage, for it was not able to establish that the
subject shipment was weighed at the port of origin at Darrow, Louisiana, U.S.A. and that the actual weight of the said shipment was
3,300 metric tons. ###

_________________________________________________________________________________________
____

12. (KITEL)

EASTERN SHIPPING LINES, INC., petitioner, vs. HON. COURT OF APPEALS AND MERCANTILE INSURANCE COMPANY,
INC., respondents

G.R. No. 97412. July 12, 1994

TOPIC: Presumption of Negligence

FACTS:

Two fiber drums of riboflavin were shipped from Yokohama Japan for delivery vessel “SS Eastern Comet” owned by
Eastern Shipping Lines. The shipment was insured under Mercantile Insurance Company. When the shipment arrived
in Manila and was delivered to the consignee’s warehouse, one drum contained spillages while the rest of its content
was fake. As a consequence to the loss sustained, the private respondent was compelled to pay the consignee due to
the fault of the petitioner.

Eastern Shipping alleged that the shipment was discharged in good condition from the vessel to the custody of Metro
Port services (arrastre). Metro Port averred that a portion of it was already damaged when it was turned over to
them. Allied Brokerage (broker) alleged that plaintiff has no cause of action against it, not having negligent or at fault
for the shipment was already in damage and bad order condition when received by it, but nonetheless, it still
exercised extra ordinary care and diligence in the handling/delivery of the cargo.

Trial court ruled in favour of the private respondent. CA affirmed the decision.

ISSUE:

WON Eastern Shipping Lines should be held liable for the damages of the goods

HELD:

YES.
As stated in Articles 1736 to 1738 of the Civil Code, the common carrier’s duty to observe the requisite diligence in the
shipment of goods lasts from the time the articles are surrendered to or unconditionally placed in the possession of,
and received by, the carrier for transportation until delivered to, or until the lapse of a reasonable time for their
acceptance by, the person entitled to receive them. In Article 1735, when the goods shipped either are lost or arrive in
damaged condition, a presumption arises against the carrier of its failure to observe that diligence, and there need not
be an express finding of negligence to hold it liable

There are, of course, exceptional cases when such presumption of fault is not observed but these cases, enumerated
in Article 1734 of the Civil Code, are exclusive, not one of which can be applied to this case.

In the case at bar, the loss or damage was sustained while in the custody of Eastern Shipping which was evident in the
Marine Cargo Survey Report where it states that when the shipment was landed, it was observed that one fiber drum
was in damaged condition. The report further states that when the broker Allied Brokerage withdrew the shipment,
one drum was found opened without a seal and that when it reached the consignee, some of its contents were fake or
adulterated.

_________________________________________________________________________________________
____

13. (SAM)

FGU Insurance vs. G.P Sarmiento Trucking (Presumption of Negligence—— Res Ipsa Loquitor)

FGU INSURANCE VS. G.P. SARMIENTO TRUCKING

TOPIC: RES IPSA LOQUITOR

FACTS:G.P. Sarmiento Trucking Corporation (GPS) undertook to deliver thirty (30) units of Condura S.D. white
refrigerators aboard one of its Isuzu truck, driven by Lambert Eroles, from the plant site of Concepcion Industries, Inc.,
along South Superhighway in Alabang, Metro Manila, to the Central Luzon Appliances in Dagupan City. While the truck
was traversing the north diversion road along McArthur highway in Barangay Anupol, Bamban, Tarlac, it collided with
an unidentified truck, causing it to fall into a deep canal, resulting in damage to the cargoes.FGU Insurance
Corporation (FGU), an insurer of the shipment, paid to Concepcion Industries, Inc., the value of the covered cargoes in
the sum of P204,450.00. FGU, in turn, being the subrogee of the rights and interests of Concepcion Industries, Inc.,
sought reimbursement of the amount it had paid to the latter from GPS. Since the trucking company failed to heed
the claim, FGU filed a complaint for damages and breach of contract of carriage against GPS and its driver Lambert
Eroles.

The trial court dismissed the complaint on the ground that the plaintiff did not present any single evidence that would
prove that defendant is a common carrier.Considering that plaintiff failed to adduce evidence that defendant is a
common carrier and defendant’s driver was the one negligent, defendant cannot be made liable for the damages of
the subject cargoes. The CA rejected the appeal of the herein petitioner. Hence, this petition. In this petition, the
petitioner invoked the doctrine of res ipsa loquitor which holds a defendant liable where the thing which caused the
injury complained of is shown to be under the latter’s management and the accident is such that, in the ordinary
course of things, cannot be expected to happen if those who have its management or control use proper care.

ISSUE:Whether the doctrine of res ipsa loquitor is applicable in the case at bar.

HELD:The DOCTRINE OF RES IPSA LOQUITOR is not a rule of substantive law and, as such, it does not create an
independent ground of liability. Instead, it is regarded as a mode of proof, or a mere procedural convenience since it
furnishes a substitute for, and relieves the plaintiff of, the burden of producing specific proof of negligence. The
maxim simply places on the defendant the burden of going forward with the proof. Resort to the doctrine, however,
may be allowed only when (a) the event is of a kind which does not ordinarily occur in the absence of negligence; (b)
other responsible causes, including the conduct of the plaintiff and third persons, are sufficiently eliminated by the
evidence; and (c) the indicated negligence is within the scope of the defendant’s duty to the plaintiff. Thus, it is not
applicable when an unexplained accident may be attributable to one of several causes, for some of which the
defendant could not be responsible.

Res ipsa loquitur generally finds relevance whether or not a contractual relationship exists between the plaintiff and
the defendant, for the inference of negligence arises from the circumstances and nature of the occurrence and not
from the nature of the relation of the parties. Nevertheless, the requirement that responsible causes other than those
due to defendant’s conduct must first be eliminated, for the doctrine to apply, should be understood as being
confined only to cases of pure (non-contractual) tort since obviously the presumption of negligence in culpa
contractual, as previously so pointed out, immediately attaches by a failure of the covenant or its tenor. In the case of
the truck driver, whose liability in a civil action is predicated on culpa aquiliana, while he admittedly can be said to
have been in control and management of the vehicle which figured in the accident, it is not equally shown, however,
that the accident could have been exclusively due to his negligence, a matter that can allow, forthwith, res ipsa
loquitur to work against him.

_________________________________________________________________________________________
____

14. (NIKKI)

Belgian Overseas Chartering vs. Phil First Insurance (When Presumption of Negligence Does Not Arise, Defences)

BELGIAN OVERSEAS CHARTERING AND SHIPPING N.V. and JARDINE DAVIES TRANSPORT
SERVICES, INC., petitioners, vs. PHILIPPINE FIRST INSURANCE CO., INC., respondent
G.R. No. 143133. June 5, 2002
Topic: Nature and Functions of Bills of Lading

FACTS
On June 13, 1990, CMC Trading A.G. shipped on board the M/V ‘Anangel Sky’ at Hamburg, Germany 242
coils of various Prime Cold Rolled Steel sheets for transportation to Manila consigned to the Philippine Steel
Trading Corporation. On July 28, 1990, M/V Anangel Sky arrived at the port of Manila and, within the
subsequent days, discharged the subject cargo. Four (4) coils were found to be in bad order. Finding the
four (4) coils in their damaged state to be unfit for the intended purpose, the consignee Philippine Steel
Trading Corporation declared the same as total loss.

Despite receipt of a formal demand, defendants-appellees refused to submit to the consignee’s claim.
Consequently, plaintiff-appellant paid the consignee five hundred six thousand eighty six & 50/100 pesos
(P506,086.50), and was subrogated to the latter’s rights and causes of action against defendants-appellees.
Subsequently, plaintiff-appellant instituted this complaint for recovery of the amount paid by them, to the
consignee as insured.

Impugning the propriety of the suit against them, defendants-appellees imputed that the damage and/or
loss was due to pre-shipment damage, to the inherent nature, vice or defect of the goods, or to perils,
danger and accidents of the sea, or to insufficiency of packing thereof, or to the act or omission of the
shipper of the goods or their representatives. In addition thereto, defendants-appellees argued that their
liability, if there be any, should not exceed the limitations of liability provided for in the bill of lading and
other pertinent laws. Finally, defendants-appellees averred that, in any event, they exercised due diligence
and foresight required by law to prevent any damage/loss to said shipment.

ISSUE
Whether the package limitation of liability is applicable?

RULING

A bill of lading serves two functions.

1. It is a receipt for the goods shipped.
2. it is a contract by which three parties—namely, the shipper, the carrier, and the consignee—
undertake specific responsibilities and assume stipulated obligations. In a nutshell, the acceptance of
the bill of lading by the shipper and the consignee, with full knowledge of its contents, gives rise to
the presumption that it constituted a perfected and binding contract.
Further, a stipulation in the bill of lading limiting to a certain sum the common carrier’s liability for loss or
destruction of a cargo—unless the shipper or owner declares a greater value —is sanctioned by law. There
are, however, two conditions to be satisfied:
1. the contract is reasonable and just under the circumstances, and
2. it has been fairly and freely agreed upon by the parties.

The rationale for, this rule is to bind the shippers by their agreement to the value (maximum valuation) of
their goods.

It is to be noted, however, that the Civil Code does not limit the liability of the common carrier to a fixed
amount per package. In all matters not regulated by the Civil Code, the right and the obligations of common
carriers shall be governed by the Code of Commerce and special laws. Thus, the COGSA, which is suppletory
to the provisions of the Civil Code, supplements the latter by establishing a statutory provision limiting the
carrier’s liability in the absence of a shipper’s declaration of a higher value in the bill of lading. The
provisions on limited liability are as much a part of the bill of lading as though physically in it and as though
placed there by agreement of the parties.

In this case, there was no stipulation in the Bill of Lading limiting the carrier’s liability. Neither did the
shipper declare a higher valuation of the goods to be shipped. This fact notwithstanding, the insertion of the
words “L/C No. 90/02447 cannot be the basis for petitioners’ liability. Moreover, a notation in the Bill of
Lading which indicated the amount of the Letter of Credit obtained by the shipper for the importation of
steel sheets did not effect a declaration of the value of the goods as required by the bill. That notation was
made only for the convenience of the shipper and the bank processing the Letter of Credit. Notably, a bill of
lading is separate from the Other Letter of Credit arrangements.

End of January 12, 2017 Case Assignment

_________________________________________________________________________________________
____

15. (JOTHAM)

Lea Mer Industries Inc vs. Malayan Insurance (Force Majeur as Défense)

_________________________________________________________________________________________
____

16. MIGUEL

Schmitz Transport vs. TRansport Venture Inc. (Force Majeur As Defense)

_________________________________________________________________________________________
____

17. (JASMINE)

EDGAR COKALIONG SHIPPING LINES, INC., petitioner, vs. UCPB GENERAL INSURANCE COMPANY, INC., respondent

G.R. No. 146018. June 25, 2003

Facts:
 Nestor Angelia and Zosimo Mercado each delivered to Cokaliong Shipping Lines cargo consisting of Christmas
Décor and Plastic Toys to be transported on board M/V Tandag from Cebu City to Tandag , Suriago del Sur and their
cargoes were covered by Bill of Lading No. 58 and 59 respectively. On December 12, 1991, Feliciana Legaspi insured
the said cargoes under the UCPB General Insurance Co., Inc.

When the vessel left the port, it has 34 passengers and assorted cargo on board, including the goods of
Legaspi. After the vessel had passed the Mandaue-Mactan Bridge, fire ensued in the engine room, and despire earnest
efforts of the officers and crew of the vessel, the fire engulfed and destroyed the entire vessel resulting in the loss of
the vessel and the cargoes therein.

Issue:

Whether or not Cokaliong Shipping Lines is liable.

Held:

Yes. The uncontroverted findings of the Philippine Coast Guard show that the M/V Tandag sank due to a fire,
which resulted from a crack in the auxiliary engine fuel oil service tank. Fuel spurted out of the crack and dripped to
the heating exhaust manifold, causing the ship to burst into flames. The crack was located on the side of the fuel oil
tank, which had a mere two-inch gap from the engine room walling, thus precluding constant inspection and care by
the crew.

Having originated from an unchecked crack in the fuel oil service tank, the fire could not have been caused by
force majeure. Broadly speaking, force majeure generally applies to a natural accident, such as that caused by a
lightning, an earthquake, a tempest or a public enemy. Hence, fire is not considered a natural disaster or calamity. In
Eastern Shipping Lines, Inc. v. Intermediate Appellate Court, we explained:

“x x x. This must be so as it arises almost invariably from some act of man or by human means. It does not fall
within the category of an act of God unless caused by lighting or by other natural disaster or calamity. It may even
be caused by the actual fault or privity of the carrier.

_________________________________________________________________________________________
____

18. (SHAAYNE)

Ong Yul vs. CA (Inter-Island Trade: applicable Law on. Limitation of Liability)

_________________________________________________________________________________________
____

19. (JANICE)

VERETTE VS. CA

TOPIC: Inter-Island Trade: applicable Law on. Limitation of Liability

FACTS:

Hernandez trading company imported three crates of bus spare parts marked as Marco 12, Marco 13, Marco 14 from
its supplier Maruman trading company.
Said crates were shipped from Japan to Manila on noard the vessel owned by Everette Orient Lines. Upon arrival in
Manila, it was discovered that Marco 14 was missing.

Hernandez makes a formal claim to Everette in an amount of 1 mill ++ Yen, which is the amount of the cargo lost.
However, Everett offers an amount of 100k because it is the amount that was stipulated in its Bill of Lading.

Hernandez files a case at the RTC of Caloocan, RTC rules1 in favor of Hernandez holding Everett liable for the amount
of !mill ++ Yen.
THE CA affirmed the RTC’s ruling and made an additional observation that since Hernandez is not a privy to the
contract in the bill of lading ( the contract was entered by Everett and Maruman trading [shipper]), and so the 100k
limit stipulated will not bind Hernandez making Everett liable for the full amount of 1mill ++ Yen.

ISSUE:

1. Is Everett liable for the full amount or the amount that was stipulated in the contract?- what was stipulated in the
contract
2. Is Hernandez a privy to the contract which says that Petitioner is liable only for 100k? Yes

RULING:

1. Controlling provisions for this issue would be 1749 and 1750 of the Civil Code. 2

In Sea Land Service, Inc. vs Intermediate Appellate Court

That said stipulation is just and reasonable is arguable from the fact that it echoes Art. 1750 itself in providing a limit
to liability only if a greater value is not declared for the shipment in the bill of lading. To hold otherwise would
amount to questioning the justness and fairness of the law itself, and this the private respondent does not pretend to
do. But over and above that consideration, the just and reasonable character of such stipulation is implicit in it giving
the shipper or owner the option of avoiding accrual of liability limitation by the simple and surely far from onerous
expedient of declaring the nature and value of the shipment in the bill of lading

The clause of the contract goes:

“The carrier shall not be liable for any loss of or any damage to or in any connection with, goods in an amount
exceeding One Hundred Thousand Yen in Japanese Currency (Y100,000.00) or its equivalent in any other currency per
package or customary freight unit (whichever is least) unless the value of the goods higher than this amount is declared
in writing by the shipper before receipt of the goods by the carrier and inserted in the Bill of Lading and extra freight is
paid as required.” (Emphasis supplied)

The shipper, Maruman Trading, had the option to declare a higher valuation if the value of its cargo was higher than the
limited liability of the carrier. Considering that the shipper did not declare a higher valuation, it had itself to blame for not
complying with the stipulations.

The trial court’s ratiocination that private respondent could not have “fairly and freely” agreed to the limited liability clause in the
bill of lading because the said conditions were printed in small letters does not make the bill of lading invalid.
In Ong Yiu VS. CA the court said that

“ contracts of adhesion wherein one party imposes a ready-made form of

contract on the other, as the plane ticket in the case at bar, are contracts
not entirely prohibited

A contract limiting liability upon an agreed valuation does not offend

 against the policy of the law forbidding one from contracting against his
own negligence

The shipper, Maruman Trading, we assume, has been extensively engaged in the trading business. It can not be said
to be ignorant of the business transactions it entered into involving the shipment of its goods to its customers. The
shipper could not have known, or should know the stipulations in the bill of lading and there it should have declared a
higher valuation of the goods shipped. Moreover, Maruman Trading has not been heard to complain that it has been
deceived or rushed into agreeing to ship the cargo in petitioner’s vessel.

2. Even if the consignee was not a signatory to the contract of carriage between the shipper and the carrier.

_________________________________________________________________________________________
____

20. (RHOWEE)

AMERICAN HOME ASSURANCE, COMPANY, petitioner,

vs.
THE COURT OF APPEALS and NATIONAL MARINE CORPORATION and/or NATIONAL MARINE CORPORATION
(Manila), respondents.
G.R. No. 94149 May 5, 1992

TOPIC: Qualified liability Clause, Inapplicable when Carrier is Negligent

FACTS:
Cheng Hwa Pulp Corporation shipped 5,000 bales of bleached kraft pulp from Haulien, Taiwan on board "SS
Kaunlaran", which is owned and operated by herein respondent National Marine Corporation. The said shipment was
consigned to Mayleen Paper, Inc. of Manila, which insured the shipment with herein petitioner American Home
Assurance Co. as evidenced by Bill of Lading No. HLMN-01.
The shipment arrived in Manila and was discharged into the custody of the Marina Port Services, Inc., for
eventual delivery to the consignee-assured. However, upon delivery of the shipment to Mayleen Paper, Inc., it was
found that 122 bales had either been damaged or lost. The loss was calculated to be 4,360 kilograms with an
estimated value of P61,263.41.
Mayleen Paper, Inc. then duly demanded indemnification from respondent National Marine Corporation for
the aforesaid damages/losses in the shipment but, for apparently no justifiable reason, said demand was not heeded.
Mayleen Paper, Inc. sought recovery from the insurer. American Home Assurance then paid Mayleen Paper,
Inc. hence, was subrogated to the rights and interests of Mayleen Paper, Inc. The petitioner, as subrogee, then
brought suit against respondent for recovery.
Respondent filed a motion to dismiss stating that American Home Assurance Company had no cause of action
based on Article 848 of the Code of Commerce which provides "that claims for averages shall not be admitted if they
do not exceed 5% of the interest which the claimant may have in the vessel or in the cargo if it be gross average and
1% of the goods damaged if particular average, deducting in both cases the expenses of appraisal, unless there is an
agreement to the contrary." It contended that based on the allegations of the complaint, the loss sustained in the case
was P35,506.75 which is only .18% of P17,420,000.00, the total value of the cargo.
ISSUE: Whether or not a common carrier can limit its liability (thus applying the law on averages in this case) even if
it is
negligent.
HELD: NO.
The Court held that under Article 1733 of the Civil Code, common carriers from the nature of their business
and for reasons of public policy are bound to observe extraordinary diligence in the vigilance over the goods and for
the safety of passengers transported by them according to all circumstances of each case. Thus, under Article 1735 of
the same Code, in all cases other than those mentioned in Article 1734 thereof, the common carrier shall be
presumed to have been at fault or to have acted negligently, unless it proves that it has observed the extraordinary
diligence required by law (Ibid., p. 595).
But more importantly, the Court ruled that common carriers cannot limit their liability for injury or loss of
goods where such injury or loss was caused by its own negligence. Otherwise stated, the law on averages under the
Code of Commerce cannot be applied in determining liability where there is negligence (Ibid., p. 606).
The records show that upon delivery of the shipment in question of Mayleen's warehouse in Manila, 122
bales were found to be damaged/lost with straps cut or loose, calculated by the so-called "percentage method" at
4,360 kilograms and amounting to P61,263.41 (Rollo, p. 68). Instead of presenting proof of the exercise of
extraordinary diligence as required by law, National Marine Corporation (NMC) filed its Motion to Dismiss,
hypothetically admitting the truth of the facts alleged in the complaint to the effect that the loss or damage to the 122
bales was due to the negligence or fault of NMC. As ruled by this Court, the filing of a motion to dismiss on the ground
of lack of cause of action carries with it the admission of the material facts pleaded in the complaint. Such being the
case, it is evident that the Code of Commerce provisions on averages cannot apply.
On the other hand, Article 1734 of the Civil Code provides that common carriers are responsible for loss,
destruction or deterioration of the goods, unless due to any of the causes enumerated therein. It is obvious that the
case at bar does not fall under any of the exceptions. Thus, American Home Assurance Company is entitled to
reimbursement of what it paid to Mayleen Paper, Inc. as insurer. ###
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21. (SAM)

Magellan Mfg. Marketing vs. CA (Overseas Trade, Carriage of Goods By Sea Act—COGSA)

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22. (NIKKI)

UCPB General Insurance Co. Inc vs. Aboitiz Shipping Corp (Overseas Trade, Carriage of Goods By Sea Act—COGSA)

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23. (JOTHAM)
Wallem Phils. Shipping Inc. vs. S.R. Firms Inc. (Overseas Trade, Carriage of Goods By Sea Act—COGSA)

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24. (MIGUEL)

Phil Airlines, Inc. vs. CA (Warsaw Convention on Air Transportation)

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25. (JASMINE)

LORENZO SHIPPING CORP., petitioner, vs. CHUBB and SONS, Inc., GEARBULK, Ltd. and PHILIPPINE TRANSMARINE
CARRIERS, INC., respondents

G.R. No. 147724. June 8, 2004

TOPIC: Limited Period to recover on damage to cargo (Inter-Island Trade)

Facts:

Mayer Steel Pipe Corporation loaded 581 bundles of ERW black steel pipes on board M/V Lorcon IV owned by
Lorenzo Shipping, for shipment to Davao City. Lorenzo Shipping issued a clean bill of lading for the account of the
consignee, Sumitomo Corporation of San Francisco, California, USA, which in turn, insured the goods with Chubb and
Sons, Inc.

The M/V Lorcon IV arrived at the Sasa Wharf in Davao City and Transmarine Carriers received the subject
shipment which was discharged. Transmarine discovered that seawater in the hatch of M/V Lorcon IV, and found the
steel pipes submerged in it. Sumitomo then hired the services of R.J. Del Pan Surveyors to inspect the shipment prior
to and subsequent to discharge. The Survey showed that the subject shipment was no longer in good condition, as in
fact the pipes were found with rust formation on top and/or at the sides. After the survey, Gearbulk loaded the
shipment on board the vessel M/V San Mateo Victory, for carriage to the U.S.

While the cargo was in transit, Sumitomo sent a letter of intent to Lorenzo Shipping, which the latter
received. Sumitomo informed Lorenzo Shipping that it will be filing a claim based on the damaged cargo once such
damage has been ascertained. When M/V San Mateo Victory arrived in Oakland, California, U.S.A.., it unloaded 364
bundles of the steel pipes. Then it sailed to Vancouver, Washington, where it unloaded the remaining 217 bundles.
When the steel pipes were tested Toplis and Harding found that they had come in contact with salt water.

Due to its heavily rusted condition, Sumitomo rejected the steel pipes and declared them unfit. It then filed
an insurance claim with Chubb and Sons, Inc. which the latter settled. Chubb and Sons, Inc. now filed a complaint for
collection of sum of money against Lorenzo Shipping. Petitioner denied liability and contended that prescription,
laches, and extinguishment of obligations and actions had set in.

Issue:

Whether or not the insurer’s right to claim for damages had already prescribed.

Held:

No. Art. 366 of the Code of Commerce states:

Within the twenty-four hours following the receipt of the merchandise, the claim against the carrier for damage or
average, which may be found therein upon the opening of the packages, may be made, provided that the indications
of the damage or average which gives rise to the claim cannot be ascertained from the outside part of such package,
in which case the claim shall be admitted only at the time of the receipt.

After the periods mentioned have elapsed, or transportation charges have been paid, no claim shall be admitted
against the carrier with regard to the condition in which the goods transported were delivered.
The twenty-four-hour period prescribed by Art. 366 of the Code of Commerce within which claims must be presented
does not begin to run until the consignee has received such possession of the merchandise that he may exercise over
it the ordinary control pertinent to ownership. In other words, there must be delivery of the cargo by the carrier to the
consignee at the place of destination. In the case at bar, consignee Sumitomo has not received possession of the
cargo, and has not physically inspected the same at the time the shipment was discharged from M/V Lorcon IV in
Davao City.

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26. (SHAAYNE)

DOLE Phils vs. Maritime Company

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27. (JANICE)

G.R. No. L-22491

DOMINGO ANG vs. AMERICAN STEAMSHIP AGENCIES INC

Facts:

Yau Yue Commercial Bank Ltd. of Hongkong, sell 140 packages of galvanized steel durzinc sheetsto one Herminio G.
Teves, shipped by Tokyo Boeki Ltd. of Tokyo, Japan. with American SteamshipAgencies, Inc. as the agent in the
Philippines, under a shipping agreement. The bill of lading was indorsed to the order of and delivered to Yau Yue by
the shipper. Upon receipt thereof, Yau Yue drew a demand draft together with the bill of lading against Herminio G.
Teves, through the Hongkong & Shanghai Bank. Upon arrival, Hongkong & Shanghai Bank notified Teves, the "notify
party" under the bill of lading, of the arrival of the goods and requested payment of the demand draft representing
the purchase price of the articles. Teves, however, did not pay the demand draft, prompting the bank to make the
corresponding protest. The bank likewise returned the bill of lading and demand draft to Yau Yue which indorsed the
said bill of lading to Domingo Ang. Despite non-payment Teves was able to secure a "Permit To Deliver Imported
Articles" which he presented to the Bureau of Customs which in turn released to him the articles covered by the bill of
lading. Subsequently, Domingo Ang claimed for the articles from American Steamship Agencies, Inc., by presenting the
indorsed bill of lading, but he was informed by the latter that it had delivered the articles to Teves. A complaint was
filed by Ang against American Steamship for having allegedly wrongfully delivered and/or converted the goods
covered by the bill of lading. Defendant filed a motion to dismiss upon the ground that plaintiff's cause of action has
prescribed under the Carriage of Goods by Sea Act. Lower court dismissed the case on the ground of prescription.
Hence, an appeal was filed to SC.

Issue:

Has plaintiff-appellant's cause of action prescribed under Section 3(6), paragraph 4 of the Carriage of Goods by Sea
Act? What is to be resolved — in order to determine the applicability of the prescriptive period of one year to the case
at bar — is whether or not there was "loss" of the goods subject matter of the complaint.
Ruling:

From the allegations of the complaint, therefore, the goods cannot be deemed "lost". They were delivered to
Herminio G. Teves, so that there can only be either delivery, if Teves really was entitled to receive them, or
misdelivery, if he was not so entitled. It is not for Us now to resolve whether or not delivery of the goods to Teves was
proper, that is, whether or not there was rightful delivery or misdelivery. There being no loss or damage to the goods,
the aforequoted provision of the Carriage of Good by Sea Act stating that "In any event, the carrier and the ship shall
be discharged from all liability in respect of loss or damage unless suit is brought within one year after delivery of the
goods or the datewhen the goods should have been delivered," does not apply. It follows that for suits predicated not
upon loss or damage but on alleged misdelivery (or conversion) of the goods, the applicable rule on prescriptions that
found in the Civil Code, namely, either ten years for breach of a written contract or four years for quasi-delict. In
either case, plaintiff's cause of action has not vet prescribed, since his right of action would have accrued at the
earliest on May 9, 1961 when the ship arrived in Manila and he filed suit on October30, 1963.Wherefore, the dismissal
order appealed from is hereby reversed and set aside and this case is remanded to the court a quo for further
proceedings. ###

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28. (RHOWEE)

BELGIAN OVERSEAS CHARTERING AND SHIPPING N.V. and JARDINE DAVIES TRANSPORT SERVICES, INC., petitioners,
vs. PHILIPPINE FIRST INSURANCE CO., INC., respondent.

[G.R. No. 143133. June 5, 2002]

TOPIC: Limited Period to Recover on Damage to Cargo: Overseas Trade

FACTS:
CMC Trading A.G. shipped on board the MN Anangel Sky at Hamburg, Germany 242 coils of various Prime Cold Rolled
Steel sheets for transportation to Manila consigned to the Philippine Steel Trading Corporation.
MN Anangel Sky arrived at the port of Manila and, within the subsequent days, discharged the subject cargo. Four (4) coils
were found to be in bad order. Finding the four (4) coils in their damaged state to be unfit for the intended purpose, the consignee
Philippine Steel Trading Corporation declared the same as total loss.
Despite receipt of a formal demand, defendants-appellees refused to submit to the consignees claim. Consequently,
plaintiff-appellant paid the consignee five hundred six thousand eighty six & 50/100 pesos (P506,086.50), and was subrogated to the
latters rights and causes of action against defendants-appellees. Subsequently, plaintiff-appellant instituted a complaint for recovery
of the amount paid by them, to the consignee as insured.
Petitioners however claimed that pursuant to Section 3, paragraph 6 of the Carriage of Goods by Sea Act (COGSA),
respondent should have filed its Notice of Loss within three days from delivery. They assert that the cargo was discharged on July
31, 1990, but that respondent filed its Notice of Claim only on September 18, 1990.

ISSUE: Whether or not the complaint will not prosper because consignee/plaintiff filed the required notice of loss beyond the time
required by law.
HELD: No. The case will still prosper. The Court said:
“First, the above-cited provision of COGSA provides that the notice of claim need not be given if the state of the goods, at the
time of their receipt, has been the subject of a joint inspection or survey. As stated, prior to unloading the cargo, an Inspection Report
as to the condition of the goods was prepared and signed by representatives of both parties.
 Second, as stated in the same provision, a failure to file a notice of claim within three days will not bar recovery if it is
nonetheless filed within one year. This one-year prescriptive period also applies to the shipper, the consignee, the insurer of the
goods or any legal holder of the bill of lading.
In Loadstar Shipping Co., Inc. v. Court of Appeals, we ruled that a claim is not barred by prescription as long as the one-year
period has not lapsed. Thus, in the words of the ponente,Chief Justice Hilario G. Davide Jr.:
Inasmuch as neither the Civil Code nor the Code of Commerce states a specific prescriptive period on the matter, the
Carriage of Goods by Sea Act (COGSA)--which provides for a one-year period of limitation on claims for loss of, or damage to,
cargoes sustained during transit--may be applied suppletorily to the case at bar.
In the present case, the cargo was discharged on July 31, 1990, while the Complaint was filed by respondent on July 25, 1991,
within the one-year prescriptive period.” ###

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